The president's budget is scheduled to come out next week. It is late again. Unfortunately, we can expect that the president didn't use this extra time to find responsible solutions to put the country on a sustainable financial path. Instead, we can expect more of the same: more spending, more class warfare tax proposals and no real commitment to reform entitlement spending. In light of this, I have a few questions I would like to ask the president.
First, this budget is likely to include no serious Social Security reform. Why? The president must know that the Social Security Trust Fund is set to dry out by 2033. When that happens, Social Security benefits will be cut by roughly 25 percent. The people hurt the most by the president's unwillingness to reform the program today will be low-income seniors who rely on these benefits.
Is it that the president washes his hands of what happens to these people, because by 2033 he will be long gone from Washington? If that the case, I wonder why the president is also unwilling to put forward reform options for the Social Security Disability Insurance program? This program’s trust fund is set to dry out in the next two years.
The administration has announced that contrary to its previous budget, it will not even pursue chained CPI -- a change that would more accurately measure general price inflation and also slightly reduces the growth rate of benefits. If it can't commit to such a small change (one that I don't support myself because of its tax implications), there is little hope that the president will ever tackle the looming Social Security insolvency.
Second, we know from the recent Congressional Budget Office report that Obamacare will have a chilling effect on the number of hours worked in the nation over the next decade.
We know from a recent Harvard study that Medicaid expansion in Oregon led to increased emergency room visits, which suggests that the intended purpose of Medicaid expansion in the health care law is not likely to be achieved. We know from the paltry enrollment figures the Department of Health and Human Services has finally provided the public that 68 percent of enrollees have been in the relatively less healthy (and more expensive to treat) 35- to 64-year-old range as of Feb. 1. We know that many individuals' previous insurance plans have seen dramatic premium increases and that too many Americans have tragically lost access to the doctors and even critical care that they desire or need during this awkward transition.
How long will the president continue to deny its painful effects on the American people?
Third, while the recently released CBO report shows a smaller budget deficit this year than projected, with the red ink shrinking from $560 billion to $540 billion, the improvement will be short-lived, with the deficit rising again in fiscal year 2016. In fiscal year 2024, the deficit is projected to be $1.074 trillion, and total deficits over the next 10 years will be $1 trillion higher than had been projected last year.
The CBO estimates that debt as a share of gross domestic product will follow roughly the same pattern as deficits: a slight decline before resuming its steady increase. But in nominal terms, our federal debt held by the public keeps growing rapidly, from $12.7 trillion today to $21.2 trillion in 2024. And our long-term budget outlook remains remarkably gloomy too.
Does the president worry about our debt? The CBO regularly warns Congress about the consequences of such debt levels: unduly burden on future generations with higher interest rates, higher taxes and serious benefit cuts, lower growth, higher unemployment rates, and lower standards of living, not to mention an inability to respond to future crises such as financial or security crises.
Fourth, the administration has suggested that the upcoming budget will mark the end of austerity. Does the president really believe that today’s slow growth can be addressed by increases in government spending?
That position doesn’t hold water even from a purely Keynesian perspective. The academic literature has shown that government spending can’t effectively stimulate growth in a high debt environment. In other words, Keynesians shouldn’t expect any growth from spending at our current debt levels. In addition, there is ample academic evidence that higher debt levels slow economic growth.
I have more questions, of course. But I won't hold my breath for answers.VERONIQUE DE RUGY, a Washington Examiner columnist, is a senior research fellow of the Mercatus Center at George Mason University.